Elon Musk has said that he is “rubber” while Twitter is “glue,” in what appears to be a derogatory reaction to what the social media company said about him in its quarterly earnings announcement.
Twitter’s revenue fell 1 percent in the second quarter, “reflecting advertising industry headwinds related to the macro environment, as well as uncertainty surrounding the upcoming acquisition of Twitter by a subsidiary of Elon Musk,” the company said.
Subscription and other revenue totaled $101 million (£84 million), down 27 percent year-on-year, while the net loss was $270 million (£225 million), a net margin of minus 23 percent equals.
“Given the pending acquisition of Twitter by a subsidiary of Elon Musk, we will not host an earnings conference call, issue a shareholder letter, or provide financial guidance in connection with our release of second quarter 2022 results,” Twitter said.
Regarding the purchase itself, Twitter said that “representatives of Mr. Musk have delivered a notice allegedly terminating the merger agreement. Twitter believes that Mr. Musk’s alleged termination is invalid and unlawful and the merger agreement remains in effect.” The company has initiated legal proceedings against Mr. Musk, and earlier this week he was granted an expedited trial, scheduled for October 2022 is.
“The exact timing, if any, of the completion of the merger cannot be predicted as the merger is subject to ongoing litigation, acceptance of the merger agreement by our shareholders and satisfaction of the remaining closing conditions,” it said.
When Twitter blamed Mr Musk for the drop in his earnings, Mr Musk replied, “I’m rubber, they’re glue”. This seems to have been a reference to a playground retort, dismissing an accusation and instead relating it to the party making it.
The saga behind Mr Musk’s purchase of Twitter began when, on April 4, 2022, Mr Musk bought 9.2 percent of the company, which is worth nearly $3 billion (£2.3 billion).
The following day, Mr Musk said he would join the company’s board of directors. After six days, Mr. Musk reversed his decision before making an offer to buy the entire company on April 14.
In May, however, Mr Musk began raising questions about the number of bot accounts on the platform — despite stating in the April press release that he was buying Twitter to deal with the spambots.
Twitter filed a lawsuit against Mr Musk last week, arguing that the tech billionaire was legally bound to go ahead with his $44 billion takeover of the social network.
Twitter argued that it was “invalid and unlawful” to exit the deal now, saying that Mr. Musk “apparently believes that, unlike any other party subject to Delaware contract law, he is free to express his opinions.” to change, ruin the company and disrupt its operations, destroy shareholder value and walk away”.
Mr Musk has claimed that his reason for backing out of the deal is that Twitter has not given him any information about fake accounts and spambots on the platform.
“Twitter failed or refused to provide this information. Sometimes Twitter has ignored Mr Musk’s requests, sometimes it has refused them for seemingly unjustified reasons, and sometimes it has claimed to do so while giving Mr Musk incomplete or unusable information,” Mr Musk’s attorney said in one Letter to the Twitter board.
Twitter then filed with the Delaware Chancery Court. Mr Musk responded to the news via a tweet: “Oh the irony lol”.
It’s unclear who will emerge victorious in this case, but if Mr Musk loses, it seems unlikely he’ll be able to simply walk out of the deal without paying a penalty.
Should Mr Musk refuse to buy Twitter despite being urged to do so by a judge, he “could be despised and face a daily fine until he complies,” according to Brian Quinn, a law professor at Boston College who spoke about teaches the law in relation to mergers and acquisitions, Bloomberg said. “For Musk, that would have to be a pretty big number.”
Tesla, which is owned by Mr. Musk, is also a Delaware company that would give the court the power to pursue Mr. Musk’s stock options. However, such a scenario is unprecedented.